Time for Unions to Face the Reality of a Changing Economy

The Verizon-CWA strike shows how an evolving economy requires evolving union priorities.


We communicate more than ever. But how we communicate has changed.

The communications revolution, customers carrying devices allowing them to communicate in multiple different ways—E-mail, texting, Facebook, Twitter, etc.—makes what once necessitated a phone call now unnecessary. Meanwhile the explosion of cell phones and other means of online calls—Skype, Gmail phone, etc.—means that those using phones are much less likely to use the landlines we've known since Alexander Graham Bell's first phone conversation.

For a company like Verizon, that means lost customers. As reported by the Boston Globe, landline customers for Verizon has been cut by more than half over the past eight years—from 55 million in 2003 to 25 million today—a number that will only continue to drop.

With the loss of customers that comes with changes in technology, Verizon is faced with the dilemma horse buggy manufactures faced with the advent of the car—adapt or die.

This makes the current labor dispute between Verizon and the Communications Workers of America (CWA) and the International Brotherhood of Electrical Workers (IBEW) a possible case study for the future of contract negotiations with companies facing evolving technologies that change their very business models. [Read Peter Roff: Unions Lose Big in Wisconsin Recall Elections]

Verizon's contracts with CWA and IBEW expired earlier this month. But the company's proposal that some union employees pay, for the first time, a portion of their healthcare premiums caused the unions to walk out and form a picket line.

As often happens with collective bargaining negotiations, some of the posturing is ridiculous. One union contract provision dating back to the early 1960s requires Verizon to dispatch two workers on service calls to the Upper East Side of Manhattan. While originally intended to be a safeguard measure when the area was considered rough-and-tumble, the city socialites and tourists populating the Café Carlyle, or even the Upper East Side Brother Jimmy's BBQ, for that matter, are a little less intimidating. Yet, the rule remains in place. Another mandates that union landline techs in the D.C. metropolitan area can receive up to 40 weeks of additional pay if they are fired for poor attendance.

And, of course, there have been the "service disruptions" all too common with a strike.

But the healthcare negotiations are a serious matter. Currently, eastern-based Verizon union landline techs pay nothing for their health care insurance premiums. Verizon has proposed landline techs pay $115 per month in premiums for family coverage. Doing so, the company says, will help allow it to stay competitive. [See a collection of political cartoons on healthcare.]

There's also the fact that Verizon's current health plan would classify for what Obama called a "Cadillac" plan.  Unless changes are made to it, Verizon will be hit with a massive new tax burden while its landline business declines.

The Kaiser Family Foundation found that just 1 percent of American workers pay nothing toward their family coverage premiums.  For union officials, though, giving in would surely seal their fate at the next union elections.

Meanwhile, the strike has ended. Workers have returned from picket lines under the same terms as those from the contract that expired earlier this month. Some union observers are claiming the return to work is a "small victory" for CWA and IBEW, but how is that possible when the major contract issues remain unresolved and, by striking to avoid paying any healthcare premiums, union leaders cost their membership real pay?

Meanwhile, the world has changed—not simply in how consumers communicate, but in the larger economy. Unemployment is at 9 percent. Consumer confidence is practically nonexistent. Jobs fairs are swarmed. Gas prices hover around $4 per gallon. Economists often ask if these are the "new norms" we face. [See a collection of political cartoons on gas prices.]

Companies must change, too, especially when faced with declining revenues from a declining number of customers.  Unions, of course, seek to stake out the best positions for its members but ultimately must recognize that reality affects their bottom line, as well.

  • See photos of the union protests in Wisconsin.
  • Read about the 10 cities that have the most union members.
  • See a slideshow of the 10 winners in the healthcare debate.